Omega Ukama 
BUSINESS has called on the government to revise its treatment of levies on mobile telecommunications services, saying the current arrangement amounts to double taxation and threatens operators’ viability.
In 2014, the Treasury introduced a special excise duty on airtime (SED) at five percent, which was subsequently revised to 10 percent in 2017.
According to the Zimbabwe Revenue Authority, the levy is a direct tax, meaning that the sale value upon which it is charged forms part of gross income for tax purposes.
This also means that the levy is not allowable as an income tax deduction and this, the Zimbabwe National Chamber of Commerce (ZNCC) says, results in “double-taxation.”
“The resultant effect of charging SED on the sale value of airtime will mean that income to a service provider will suffer income tax based on the gross sales and later on the profits after the deductions of exemptions and allowable deductions,” ZNCC said in a recent note.
“This treatment of SED will negatively impact the profitability of the service providers and is likely to affect their viability.
“This taxation goes against the principles of taxation, which are equality or fairness, convenience, flexibility and finally, economic.”
The business member organisation said if authorities insist on including the levy in income tax computations, it should be allowed as a deduction.
“This should be back-dated to October 1, 2014,” ZNCC said.
This also comes as mobile network operators have been lobbying the authorities to allow them to review tariffs to maintain viability.
“Our headline tariffs were last reviewed in August 2020. Given the inflationary pressures experienced, we believe that another tariff review is due for the sector to remain viable. All our pricing is determined by the regulator using given cost inputs.
“The timely adjustment of tariffs, using the Telecommunications Pricing Index, is critical to our continued viability as a business,” Econet Wireless Zimbabwe said in its most recent results.
Meanwhile, the ZNCC has reiterated that the two percent Intermediated Money Transfer Tax (IMTT) ought to be revised.
The much-debated levy was introduced in October 2018, when the government launched its austerity programme — the Transitional Stabilisation Programme (TSP) — which at first triggered a bout of price increases and invited a backlash from consumers.
“It should be noted that the IMTT is a tax on an expense and not on revenue. IMTT therefore is in fact more of a cost and such should qualify as a deduction the same way other transaction-based taxes such as customs duties, stamp duties are allowed as a deduction,” ZNCC said.
The organisation has on a number of occasions in the past called on changes to the levy.
